Removing a Co-Owner From the Deed Without Notice to the Mortgage Lender

My question involves real estate located in the State of: Utah

Am I okay removing my co-signer from the house deed without my mortgage company knowing?

The co-signer would stay on for the mortgage loan; his name would simply be removed from the deed.

Here's the deal: My wife and I bought our home 3 1/2 years ago. I don't make much (teacher), so our lender wanted a co-signer on the mortgage. Completely understandable. My retired step-father was willing to do it. The lender then requested that his name be on the deed as well (after first telling us there was no need for this). Reluctantly, we both agreed.

We'd both like to remove his name from the deed, as he is elderly and could pass away. I don't want to have to deal with probate court. We have a quit-claim ready and notarized, but I'm a little hesitant to submit it. I know there is typically a clause where they can request full payment if a name has been removed from the deed. However, I've been told by a professional at Chase bank that this is exceptionally rare and it would be fine to go ahead and do it. I wanted a second opinion, though, as this is my family's home we're talking about.

I've tried to contact my lender multiple times about this, and it's been a complete nightmare. Customer service doesn't know the answer, so they transfer me to a different department, who then transfers me back to customer service. I'm sick of dealing with them, and just want to get it over with. Again, he would stay on as co-signer; he'd just be removed from the deed.

I appreciate any advice you could give me.

You can't remove anybody but yourself from the deed. The co-signer, if he is on the deed, can remove himself. Of course, he'd be a damned fool to do so why he was still responsible for the loan (which changing the deed).

Indeed, the bank would almost certainly be within their rights to invoke a due on sale clause if you did this. I do somewhat agree that in the current banking climate (this is different from the old rising-interest rate days) that the bank is disinclined to do so unless you aren't making the payments.

The most proper and equitable thing for you to do is to refinance the house without the cosigner and have him quitclaim the property to you contemporaneously with that.

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Quoting DinbellAbernathy

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I appreciate any advice you could give me.

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Well, you know what the loan contract says. If you breach the contract you take your chances.

Nobody at the lender is going to tell you it's OK because they aren't authorized to say it's OK to breach the contract when it isn't.

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However, I've been told by a professional at Chase bank that this is exceptionally rare and it would be fine to go ahead and do it.

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That "professional" will have a convenient memory loss if push comes to shove. He also has no authority to "tell" you it's OK.

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We'd both like to remove his name from the deed, as he is elderly and could pass away. I don't want to have to deal with probate court.

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Take out your deed and read the ownership. If the ownership is all three of you "with right of survivorship" you won't have to deal with probate, the home will automatically belong to you and your wife upon his death without probate.

Just make sure it's "Jane and Joe and Sam with right of survivorship" and not "Jane and Joe with right of survivorship and Sam."

The latter wording will require probate of Sam's ownership and you would become partners with Sam's other heirs.

If it's written with the latter wording it's an easy fix to redo the deed without breaching the loan contract.

Look into it.

Frankly, it would be foolish for Sam to relinquish ownership and still be responsible for the debt. But, that's up to Sam.

Great. Thanks for your input.

Actually, just looked at it. It has all three of us as joint tenants. No right of survivorship is listed.

Is there an easy way to amend this? It'd be much simpler than going through with the quitclaim deed.

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Quoting DinbellAbernathy

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Great. Thanks for your input.

Actually, just looked at it. It has all three of us as joint tenants. No right of survivorship is listed.

Is there an easy way to amend this? It'd be much simpler than going through with the quitclaim deed.

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See a real property lawyer in your state. If the deed specifically uses the phrase “as joint tenants” it may be that the presumption in the state is that it means joint tenancy with a right of survivorship (JTWROS). In real property law there are two primary states of joint ownership that may exist when owners include someone other than a married couple: tenants in common (TIC) and JTWROS. Because TIC does not use the term joint tenants but JTWROS does, some states create a presumption that using joint tenants is short hand for JTWROS, though that presumption can be rebutted. I have not found a case in UT that has decided that issue in my brief search, but a Utah property lawyer should be able to answer that. If there is no such presumption in that state, the lawyer can advise you how best to modify the deed to clearly reflect that.

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Quoting DinbellAbernathy

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Is there an easy way to amend this? It'd be much simpler than going through with the quitclaim deed.

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I located the Utah statute:

https://law.justia.com/codes/utah/20...r-1/section-5/

Right of survivorship is only presumed when joint tenancy is between husband and wife. (1)(a).

Every other joint tenancy interest is presumed to be a tenancy in common interest unless expressly declared in the grant to be otherwise. (1)(b)

So, yes, it looks like your deed will have to be amended.

Easy enough to use a quitclaim deed to convey ownership from "Moe, Larry and Curly joint tenants" to "Moe, Larry and Curly joint tenants with right of survivorship."

But have an attorney do it for you to make sure it's written and recorded properly. The few hundred that it might cost you will give you peace of mind.

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Quoting adjusterjack

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I located the Utah statute:

https://law.justia.com/codes/utah/20...r-1/section-5/

Right of survivorship is only presumed when joint tenancy is between husband and wife. (1)(a).

Every other joint tenancy interest is presumed to be a tenancy in common interest unless expressly declared in the grant to be otherwise. (1)(b)

So, yes, it looks like your deed will have to be amended.

Easy enough to use a quitclaim deed to convey ownership from "Moe, Larry and Curly joint tenants" to "Moe, Larry and Curly joint tenants with right of survivorship."

But have an attorney do it for you to make sure it's written and recorded properly. The few hundred that it might cost you will give you peace of mind.

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They are already listed as joint tenants. The law says this:

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a) Use of words "joint tenancy" or "with rights of survivorship" or "and to the survivor of them" or words of similar import means a joint tenancy.

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I find nothing clearly stated about rights of survivorship.
. It does say this though;

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b)

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• (i) Use of words "tenancy in common" or "with no rights of survivorship" or "undivided interest" or words of similar import declare a tenancy in common.

• (ii) Use of words "and/or" in the context of an ownership interest declare a tenancy in common unless accompanied by joint tenancy language described in Subsection (2)(a), which creates a joint tenancy.

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So if it excludes rights or survivorship it is a tenancy in common. That suggests rights of survivorship is inherent with a joint tenancy.

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Quoting adjusterjack

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So, yes, it looks like your deed will have to be amended.

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I disagree that the statute compels that conclusion. A court may well hold that the use of the term “joint tenants” is sufficient to mean joint tenants with a right of survivorship since the alternative is tenants in common, which does not use the phrase “joint tenants” like joint tenants with a right of survivorship does. In order to sort that out, you really need a court decision on it to know for sure.

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Quoting adjusterjack

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Easy enough to use a quitclaim deed to convey ownership from "Moe, Larry and Curly joint tenants" to "Moe, Larry and Curly joint tenants with right of survivorship."

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Easy enough to write it, but that does not guarantee it’s the right way to do it. For example, at common law one could not convey real property to himself. Thus, under that rule it was necessary to use a straw party and do the conveyance in two steps. Whether Utah still adheres to that old concept I don’t know; a few states still do, however. There may be other quirks in the law that affect this, too. Real property law is among the oldest law and changes at a very glacial pace (unlike, say tax law that changes all the time) and a state may still use very ancient concepts in its property law. So it is important to consult a real estate attorney who knows all the ins and outs of the matter in the particular state where the property is located.

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Quoting jk

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They are already listed as joint tenants. The law says this:

•(i) Use of words "tenancy in common" or "with no rights of survivorship" or "undivided interest" or words of similar import declare a tenancy in common.

•(ii) Use of words "and/or" in the context of an ownership interest declare a tenancy in common unless accompanied by joint tenancy language described in Subsection (2)(a), which creates a joint tenancy.


So if it excludes rights or survivorship it is a tenancy in common. That suggests rights of survivorship is inherent with a joint tenancy.

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Only between husband and wife. OP's ownership is not just between husband and wife so right of survivorship is not presumed in a three way split according to (1)(a) and must be stated so according to (1)(b).

Besides, the two sentences you quoted only address joint tenancy, not right of survivorship whereas (1)(a) and (1)(b) do address right of survivorship.

Just to play devil's advocate for a second...

If its joint tenancy with rights of survivorship with all three of them by default (or they change it to that if its not be default) then isn't their the risk that if Jane and Joe get killed by a bus while Sam is still living, that the house will end up belonging to Sam's heirs eventually rather than Jane and Joe's?

I would tend to try for the previous advice to try to refinance the house and get Sam off of it if possible.